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Government Operations and Taxes Dominate Agenda

By The Children’s Home Society of Florida Foundation

On September 29th, the House of Representatives passed H.R. 3081 and provided for continuing federal government operations until December 3, 2010. President Barack Obama signed the bill on September 30th and government operations will continue until December using last year’s budget.

“Lame-Duck” Session

Following the November election, Congress will return and pass budget bills for fiscal year 2011. The short “lame-duck” session will be very busy because Congress faces major decisions on the budget bills and also has not completed work on 2011 taxes.

Tax Cut Support

A group of 31 House Democrats sent a letter to Speaker Nancy Pelosi (D-CA) and supported a 2011 extension for all of the 2001/2003 tax cuts. If there were a deadlock in Congress in November, then there would be a large tax increase for all Americans on January 1, 2011. However, the White House and Speaker Pelosi have supported extending the “middle class” tax cuts, but requiring single persons with incomes over $200,000 (married couples over $250,000) to pay taxes at a higher rate.

House Minority Whip Eric Cantor (R-VA) expressed concern that there was not a vote on extension of the tax cuts. He indicated that with the combination of support by most Republicans and 31 Democratic House members, the tax cuts could be extended for 2011.

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The November Agenda

In the November session of Congress, there is a need to address income taxes, capital gains tax and estate taxes:

1. Income taxes – The White House and Speaker Pelosi propose extending the middle class tax cuts and allowing the top two income tax brackets to increase to 36% and 39.6%. Most Republicans and the 31 Democratic House members would extend all of the tax cuts.

2. Capital Gains Tax – The White House and Speaker Pelosi would increase the tax from 15% to 20%. Most Republican House members and many moderate Democratic members would retain the 15% rate for 2011.

3. Estate Tax – If there is a deadlock in Congress, the estate tax exemption returns to $1 million and the tax rate will be 55%. The White House and House Democratic leaders have generally supported an exemption of $3.5 million with a rate of 45%. The last proposed compromise by Sen. Jon Kyl (R-AZ) and Sen. Blanche Lincoln (D-AR) was for an exemption of $5 million with a rate of 35%.

Editors Note: Your editors and the ME-P take no specific position on these tax proposals. The information is offered as a public service to our readers. 

Assessment

All medical professionals, and financial advisors, please be aware!

Conclusion

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Filed under: Alerts Sign-Up, Estate Planning, Retirement and Benefits, Taxation | Tagged: capital gains taxes, Eric Cantor, estate taxes, H.R. 3081, Income taxes, Nancy Pelosi, President Obama | 3 Comments »